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Friday, December 11, 2009

Thoughts on the Recession

From the standpoint of production, the low point was right near the beginning of 2009, as illustrated by the above graphs.   (Click on them to enlarge.)  So production has been generally increasing during 2009, but total production is well below pre-recession values.   This of course means that U.S. industry is working well below capacity, and of course this means that large numbers of people are not working at all.

One way to correct that would be to share the work, i.e., to have large numbers of people working part time, or to simply reduce the typical work week to something well below 40 hours.   This would also correspond with a transition to a sustainable economy, rather than a growth economy.   Of course I am strongly in favor of such a transition, but at present this represents a minority viewpoint, and a very small minority at that.

What is actually going to happen is a slow return to excess production so that Americans can have lots of junk that they don't need and most people will again work 40 hours or more.   But that is not sustainable, so there will be another recession, likely worse than this one, and I would guess this will happen about 2014, where it will coincide with large numbers of baby boomers reducing their consumption levels.

That recession could be postponed for many years if green industries boom in a big way.

Wednesday, December 9, 2009

Arizona Mismanagement

My state seems to have the worst government in the nation, at least where handling money is concerned. I heard on NPR this morning that the per capita budget deficit is number one in the nation, and that
bankruptcy is a possibility. State income is at 2003 levels, whereas state spending last month was at a record high, as was the previous month. Another relevant factoid, not mentioned in today's news, is
that state spending on public schools, per student, is close to the nation's lowest, competing with Mississippi.

Now John McCain is not the only multi-millionaire in Arizona.  We have our share of very rich people.  As you might guess, I suspect that the wealthy people of AZ are not paying much in the way of taxes, as I think they should be.  But I have not researched this so I don't know how the tax collections compare with other states.  I also don't know how the state's expenditures compare with other states, except for the public school system.  We have both a sales and an income tax, and we spend a minimal amount on the schools, yet we don't collect as much as we spend!

The legislature has been arguing about this for a year or more.   All they talk about is cutting spending.  I never hear about any proposed tax hikes other than a sales tax hike, which was proposed and rejected.

Oh, yeah, they have put the Capitol Building up for sale!   They plan to sell it and then pay rent, using the proceeds to forestall bankruptcy for a year or two.   What a dumb idea, but if you cannot raise taxes, maybe it's better than bankruptcy.  It's only a short term fix, and it raises the states expenses, because of the rent they will have to pay.   Also, this is not the time sell real estate.  If they wait two or three years they can probably get more money for it.  Of course, if they wait, they might not have to sell it, assuming they do something serious about their deficit problem.

Of course the majority of the legislators are republican, as is the governor.